Finance Committee on June 1st, 2006

[John McCallum, Liberal, Markham—Unionville, ON]

They could show a little compassion for hard-working, overtaxed Canadians.

[A voice]

I hate to say it, but it's common sense

[The Chair, Conservative, Brian Pallister]

Are there any other speakers?

[John McKay, Liberal, Scarborough—Guildwood, ON]

A recorded vote.

[The Chair, Conservative, Brian Pallister]

A recorded vote.

What are we voting on? Is it on the 15.25%, the friendly amendement?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Since there are no takers for the friendly amendment, we'll leave it at the 15%.

[The Chair, Conservative, Brian Pallister]

Amendment L-5. We'll call for a recorded vote.

(Amendment negatived: nays 6; yeas 5)

Amendment L-6.

We move to Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I think the Conservatives have just done me a favour, since I would be perfectly incapable of explaining amendment L-6. It's intended to increase all the basic amounts laid out in the proposal we tabled in November 2005.

May I take just two seconds? I want to make sure I'm right on this.

[The Chair, Conservative, Brian Pallister]

You may take a moment.

Prior to moving to this amendment, Mr. Pacetti, we'll back up for a second. I understand procedurally we should vote on clauses 58 and 59 prior to dealing with clause 60.

(Clauses 58 and 59 agreed to on division)

[The Chair, Conservative, Brian Pallister]

We will now deal with clause 60.

I'm sorry, Mr. Pacetti. Please proceed.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I basically just wanted to amend the amounts that were in clauses 60 and onward. All we're trying to do is bring back the personal rates to the amounts we had.

If you look even at the budget papers on page 218, the basic personal amount is at $8,648. We just want to increase it, with an additional $500. I think you can see that with my amendment in subclause 60(1) to proposed paragraph 118(3.1)(a): “for the 2005 taxation year, to be replaced by” the amount of $500.

That's what's in effect right now, but later on, in proposed paragraphs (b) and (c) of that subsection 118(3), it's just to readjust the base by an additional $200 and, for 2007, by an additional base of $100. That was the intent.

[The Chair, Conservative, Brian Pallister]

I'm sorry, Mr. Pacetti. Have you concluded your comments?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I just want to see if I can give you the exact amounts, because we're trying to bring the basic personal amounts from the $8,639 that's proposed in the budget to $9,039. It would be about a $400 rise. It's because they've used the average of $200. It's $400 divided by two.

[The Chair, Conservative, Brian Pallister]

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

Maybe I could just briefly explain the purpose of this.

The Conservatives have already voted twice just now to raise the taxes of Canadians. The budget in fact reduces the basic personal amount, and as Dale Orr has indicated, the effect of this reduction of the basic personal amount in the budget is to add 200,000 low-income Canadians to the tax rolls.

The budget, through this measure, is adding 200,000 low-income Canadians to the tax rolls, people who would not otherwise pay taxes. All we're doing is changing the personal amount back to where it was before, so that we don't add low-income Canadians to the tax rolls. If they show no compassion to hard-working Canadians, in terms of insisting on raising the rates, maybe they could at least refrain from cutting the basic personal amount, which adds 200,000 low-income Canadians to the tax rolls.

Those are the grounds on which I am asking for support for this amendment.

[The Chair, Conservative, Brian Pallister]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

Mr. McCallum, you'll recall, as we heard from witnesses the other day, that this budget specifically moves an additional 200,000 people entirely off the tax roll. It doesn't add anybody.

No, it doesn't, because there are other measures in the budget that specifically remove a much larger percentage of people—a much greater number of people—off the tax roll entirely than anything that was ever proposed before. We heard finance department officials say exactly that

So what you are in fact indicating is that you dispute what the finance department officials maintained, and in fact you're misleading the public by over 400,000 people.

Yes, you are. We heard that an additional 200,000 people—more than anything that had ever been proposed, including in the latest “budget three” by the Liberals last year—will be removed entirely from the tax rolls.

[The Chair, Conservative, Brian Pallister]

Madam Ablonczy.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

I think it is an important point to make, because my friend opposite is citing a fellow economist, I'm sure.

I would like to refer the committee to the briefing by the department about tax relief. In the briefing book we all received, there is a chart that shows that every single income group will be paying less tax under budget 2006. These numbers come from the department, and I think we all accept them. This isn't some economist, and I don't know what assumptions Mr. McCallum's friend made, but these are the department's own numbers.

Every single income group in this chart that we've all seen will be paying less tax under budget 2006 than was proposed but not actually implemented or legislated by the previous government. That's a very important point to make.

We can argue about how to get to that point. My friends opposite would like to play with the personal tax rate. We've chosen to put additional measures in place, such as the GST reduction, such as the Canada employment credit, such as a permanent reduction in the lowest personal income tax rate by increasing the basic personal amount. So that is how we've balanced this delivery of lower taxes for all Canadians, and we have done that.

We can have a discussion about whether our balance is better than another proposal, but the fact is that if we move any of these numbers, we lose some other measures. So maybe my friends opposite want to repeal the reduction in the GST in order to fund their proposal to further increase the personal rate. Maybe they want to cancel the employment tax credit. I don't know what they want to do. The fact of the matter is that if you play with one set of numbers, you lose a proposal on the other side.

I think Canadians are very happy with the tax reduction proposals we've put forward. They are not the same as the Liberals, but we're not the same government as the Liberals. At the end of the day, the important thing is that every single income group of Canadians, including those earning less than $15,000 a year, will pay less tax under this plan, the Conservative plan, than they would pay under the plan that the Liberals proposed before the last election. That is according to the department's own numbers, and we should not lose sight of that, because that's really the bottom line for Canadians.

[The Chair, Conservative, Brian Pallister]

Thank you, Madam Ablonczy.

Mr. Pacetti, and then Mr. McCallum.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I don't want to get into it with Ms. Ablonczy, but apparently in our budget papers--because I'm looking for something else and I'm having a hard enough time with the basic personal amounts--we're dealing with hundreds of thousands of people who are going to be off the payroll. But apparently, in this document, we were taking more people off than in your budget. I can't cite you the appropriate page.

That's why I want to talk about my amendment. The amendment basically is the same. We're going to end up in the same place as where the Conservatives want to end up.

In 2009, we want the basic personal amounts to be $10,000. All we're talking about here is reinstating the basic personal amounts or the spousal deduction at the amount that was suggested or that was accepted in the ways and means motion in the economic update of November 2005.

Basically, all we're doing is adding $500 in 2005, an extra $200 in 2006, $100 in 2007, $100 in 2008, and $300 in 2009. It's basically what there is right now. It's not complicated.

I know the wording seems to be more complicated because they're using $300, but if you look at page 7, in the middle, (ii), it's $10,000 in the years after 2009 and just before the year 2010, which is the same amount we're trying to get to, or the Conservatives are trying to get to in 2009, which is a $10,000 basic personal amount.

The issue is not complicated. I'm just asking for my amendment to be accepted.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Pacetti.

Mr. McCallum.

[John McCallum, Liberal, Markham—Unionville, ON]

The basic point is that while I don't dispute those finance numbers in terms of their own definitions, Ms. Ablonczy ought to know that these are based on legislated tax rates, and as I've said before, Canadians living outside the beltway care about what they actually pay. So those numbers showing lower income tax at every income level are based on this convenient fiction that Canadians care about legislated rates rather than actual rates. As the finance officials have confirmed more than once, the actual rates are going up, in which case those numbers are simply wrong.

Mr. Orr has confirmed that for many Canadians the impact of this budget will be to pay more tax than before--overall. He has confirmed that, and nobody in finance--

[An hon. member]

The chart says different.

[John McCallum, Liberal, Markham—Unionville, ON]

Because that chart is based on legislated rates, which are not the rates that Canadians actually pay. If you base your analysis on rates that Canadians actually pay, then many Canadians will be paying more. That is a fact.

My second and final point is that Mr. Del Mastro is being too modest, because his minister didn't claim 200,000 taken off the tax rolls; he claimed something like 600,000 taken off the tax rolls. So he's being too modest for his side.

The numbers are totally misleading, because again, they're based on this legalism that Canadians don't care about, this concept of the legislated tax rate rather than the basic personal tax rate that Canadians actually pay. If you base it on the actual basic personal amount, the effect of this budget is to reduce the basic personal amount, thereby adding 200,000 Canadians to the tax roll.

The only way we can stop this addition of 200,000 Canadians to the tax roll is to pass this amendment. It's really as simple as that. And once we agree on the terms of the debate, I think we'll agree on what the true implications are.